Industry-Specific Bookkeeping Tips: Construction and Contracting

In the contracting and construction industries, it can be confusing to keep your books in line. There are so many variables to consider that it is very easy to get off track. I’m here to help with that!

Please note, I am not a tax professional, nor can I give you accounting/tax advice. However, I can help you with your bookkeeping! Here’s a few things you need to keep in mind to get the clearest picture possible on your numbers: 

1. You can customize your chart of accounts to include categories of transactions specific to your needs. For example, you could create an account to keep track of change-order related expenses. 

   
   

2. You need to track your direct and indirect costs meticulously. Record every transaction that is made: materials, labor, subcontractors, overhead, etc;

   
   

3. Turn on Labels/Project tracking in Quickbooks so that you can see exactly what your costs are per project! If you do this as you go, you can have a clear Work-In-Progress picture of your costs/profits

   
   

4. Choose how you are going to recognize income: Percentage of Completion (monitors your profits/costs as the job is underway) or Completed Contract (only shows the profits/costs after the job is completed).

   
   

5. Stay on top of your Accounts Receivable and Accounts Payable! You can use the invoicing and bill pay options in Quickbooks for easy management. Just make sure that you record paid invoice transactions correctly, otherwise you might be recording them twice which leads to false inflated revenue numbers. 

   
   

6. You can automate tasks within Quickbooks to help you stay on top of things like invoicing, expenses tracking and generating financial reports. 

   
   

7. Generate reports REGULARLY! This will keep you up to date on the latest snapshot of how your business is doing! We recommend generating reports at least monthly, but if that’s too frequent for you to manage, definitely every quarter!

   
   

8. Reconcile your bank statements regularly! Do not wait until the end of the year or the end of the quarter to reconcile your bank statements. This will lead to so much headache and possible mistakes. 

   
   

I hope these tips help you keep your bookkeeping under control! And as always, if you find yourself struggling, using too much of your time, or simply not wanting to deal with your books, give us a call!